The Top 3 Benefits Small Businesses Get From AI

Growth is essential for all businesses, especially the small ones.

Artificial intelligence (AI) is one tool that can help firms achieve that by giving them a competitive edge, streamlining thier operations and enhancing customer experiences. For instance, GoDaddy on Tuesday (Aug. 20) launched a new generative AI tool to help small- t0 medium-sized businesses (SMBs) with their business marketing.

“We know that digital marketing translates to business success, especially when coupled with generative AI technology,” GoDaddy said in a statement.

AI is no longer just the domain of large corporations with deep pockets and extensive tech teams. However, the ways that Main Street SMBs can unlock growth through strategic applications of AI looks a little different from the approaches being taken by their larger enterprise counterparts.

Smaller businesses are not just playing catch-up, though. From better access to working capital, to marketing and workflow automation, SMBs are leveraging AI in ways that are uniquely suited to their scale and operations.

In contrast to large enterprises, which might use AI to optimize global supply chains, SMBs are applying AI at a more localized level. A small auto repair shop, for instance, might use AI to predict which parts will be needed most frequently based on historical data, reducing the need for large inventories and ensuring that commonly needed parts are always in stock. Similarly, a local retail store could use AI to optimize staffing schedules based on customer foot traffic patterns, ensuring that they have the right number of employees at the right times.

The key to success for SMBs will be in how they choose to implement and integrate AI into their business models. By focusing on applications that align with their unique needs and strengths, Main Street businesses can use AI to drive growth in ways that are both sustainable and impactful, distinguishing themselves from larger competitors in the process.

Read more: SMBs Race to Critical Mass on AI Usage

The Future of AI for Main Street SMBs

SMBs, which typically include local retailers, restaurants, service providers and smaller manufacturers, face a different set of challenges and opportunities compared to large enterprises. These businesses often operate with limited resources, both in terms of capital and workforce, and are more deeply embedded in their local communities.

This local focus, coupled with a need for efficiency and personalization, has led SMBs to adopt AI in ways that are distinct from the large-scale, data-intensive implementations seen in bigger companies.

For small businesses, operational efficiency is critical to success. AI tools can automate routine and time-consuming tasks, such as data entry, inventory management and customer support. By automating these processes, small businesses can reduce the need for manual labor, minimize human errors and free up employees to focus on more strategic activities.

“Small business owners are using a variety of solutions. They may have seven-plus business apps in their back office, and they’re looking for a simpler and more efficient solution,” American Express Vice President of Marketing, Business Blueprint and Small Business Banking Brett Sussman told PYMNTS in an interview posted Aug. 15.

Recent research by PYMNTS Intelligence shows that 96% of SMBs that have used AI tools — though not necessarily generative AI — view it as an effective way to streamline tasks.

Read more: White House Working Capital Program Targets Small Business Stability Through 2027

AI-Driven Marketing for Main Street SMBs

SMBs benefit from the ability to quickly adopt AI tools that are specifically tailored to their needs. Unlike large enterprises that may require extensive customization and integration, many AI solutions for SMBs are designed to be plug-and-play, offering ease of use and quick deployment. This flexibility allows SMBs to experiment with different AI applications without significant upfront investment.

AI can help small businesses implement personalized marketing campaigns that resonate with specific customer segments, leading to higher engagement and conversion rates. AI-powered recommendation engines can suggest products or services based on a customer’s past behavior, increasing the likelihood of repeat purchases. Additionally, AI can enhance customer service by providing real-time support and predictive insights that anticipate customer needs before they even ask for help.

This is supported by findings revealed in “Innovators and Cost Cutters: Growth Strategies for SMBs,” a PYMNTS Intelligence report, which show that while 37% of SMBs on average use AI, 51% of those with increasing revenues use it. Businesses with increasing revenues, and those generating more than $1 million in revenue, are twice as likely to use AI as ones with decreasing or stable revenues.

SMBs with fewer resources appear to be less likely to understand the benefits of using AI, as 69% of those with decreasing revenues say they have never considered using it, per the report.

AI is also transforming how small businesses access working capital, offering more tailored, efficient and accessible financing options. For example, on Wednesday(Aug. 21), Lama AI and Bridge partnered to expand the availability of commercial loans. Financial institutions using Lama’s AI-powered origination technology will be able to access Bridge’s marketplace that connects business owners and lenders.

AI-driven algorithms can analyze a broader set of data points, including non-traditional metrics such as transaction history, social media activity and customer reviews, to evaluate an SMB’s creditworthiness.